Independent investment bank Lazard is poised to hire more senior bankers despite a downturn in the business boom that has seen bigger rivals cut costs.
The bank aims to hire 10 to 15 CEOs over the course of this year, Peter Orszag, chief executive of Lazard’s advisory business, told Financial News. “We’ve been actively recruiting, and as the market changes, there are even more opportunities to find really talented people with compensation terms that we consider acceptable,” he said. “There are several priority areas for growth and we will invest throughout the cycle.”
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Lazard disclosed a 14% drop in advisory revenue in the second quarter of 2022 to $407 million as investment banks battled a slowdown in deals from record highs. Economic fears have dampened appetite, while funding markets for large transactions have largely frozen. The bank’s overall profit fell 22% to $95 million.
Orszag said Lazard was looking for bankers in healthcare, technology, media and Germany, as well as bolstering its private credit team. It has already announced eight CEO-level hires in the past month, and Orszag said continental Europe and the UK were also potential areas for growth.
Ken Jacobs, chairman and chief executive of Lazard, said the bank was being more disciplined on costs but was still investing in the business. “You have to carefully balance the appeal of investing in a downturn, because that’s when you’re well positioned for when the cycle turns. It’s something we’ve focused on for a long time.”
JPMorgan and Morgan Stanley reported declines of around 55% in their investment banking fees in the second quarter, while revenue fell 41% at Goldman Sachs over the same period. Goldman and Morgan Stanley have cut wages in the first half of the year.
Banks took in a record $130 billion last year, according to data provider Dealogic, but fees are set to drop 46% in 2022 to $46.2 billion.
“I think there’s going to be a bit of a dead time until there’s a reset in terms of credit conditions, but also in terms of valuations,” Jacobs said of the outlook for deals. “It’s probably a few months at best and could be a little longer at worst.”
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